Gas Price Spikes Shock Midwest Motorists

December 27, 2002; Brad Foss writing for AP reports that with oil trading at two-year highs, motorists nationwide should expect to see a gradual rise in gasoline prices. But some recent overnight spikes in the Midwest are shocking motorists and even veteran market watchers.

They include post-Christmas increases of 20 cents a gallon in Lexington, Ky., and 16 cents a gallon in Findlay, Ohio.

``I thought there must be a war or something to see it jump like that,'' said Issa Shalash of Lexington, a self-employed construction worker who filled one of two tanks on his pickup truck with unleaded plus gas at $1.58 a gallon.

Normally prices rise a couple of pennies at a time but, after keeping prices steady throughout much of December, retailers may now be rushing to pass along record-high wholesale prices to consumers, analysts said.

``Whoa! Hot diggity dog,'' Jacob Bournazian, an analyst who tracks gasoline trends for the Energy Department, said Friday after being told of the sudden jumps. He said he had heard of similar increases in Western Pennsylvania.

``Basically, retail prices have to adjust to what's going on with wholesale markets,'' he said.

U.S. fuel supplies remain adequate but have gotten tighter, Bournazian said, due to the loss of oil and gasoline shipments from Venezuela, whose petroleum industry has been shut down due to political strife since the beginning of December.

The price of crude for February delivery rose 23 cents Friday to $32.72 per barrel — a two-year high — on the New York Mercantile Exchange. The wholesale price of gasoline rose 0.28 cent to 93.25 cents a gallon, levels not seen since June 2001.

On Monday, the nationwide retail price of gasoline was $1.40 per gallon, up roughly 4 cents from the week before and 33 cents from the previous year, according to the Energy Information Administration, the Energy Department's statistical arm.

Whether the price spikes in Kentucky and Ohio are an anomaly or the beginning of a trend remains to be seen, analysts said.

``Most price increases are painstaking and plotting,'' said Tom Kloza, director of the Oil Price Information Service, a Lakewood, N.J., publisher of industry data.

In Lexington, BP, Shell and Speedway stations across the city raised their per-gallon prices for regular unleaded gas from about $1.29 to $1.49 the day after Christmas.

Lexington's gasoline market is dominated by Speedway and SuperAmerica stations, retail outlets owned by Marathon Ashland Petroleum LLC of Findlay. Linda Casey, a spokeswoman for Speedway, confirmed that a systemwide gasoline price increase had gone into effect as a result of higher oil prices.

Marathon Ashland has seven refineries and 2,250 gas stations in 11 states throughout the Midwest. Casey said the magnitude of the increase varied from market to market, and was up 15 to 16 cents per gallon in Findlay.

Some other stations said they took their cue from Speedway. ``We go by what the price is in the rest of the area and we concentrate on (competing with) Speedway,'' said Carla Hensley, manager of the Shell station just off I-75. ``If they go up, we go up. If they go down, we go down.''

Casey said Speedway's prices typically follow those of its major competitors in the Midwest, particularly Cincinatti-based Kroger, the giant supermarket chain, which also sells gasoline. A spokesman for Kroger could not be reached for comment.